UK Watchdog Secures Support Of Panel Banks For Libor

Libor will continue with investment banks' backing until it is phased out in 2021, the Financial Conduct Authority announced today.

Both banks will continue to submit to all of the other panels that they now participate in.

It serves as the first step to calculating interest rates on various loans throughout the world, and there had been recent concerns over its sustainability while the regulator seeks to introduce an alternative system.

The FCA does not expect any further changes to panels.

"The FCA welcomes the support and agreement of all banks to remain as submitters until 2021", the watchdog said in a statement.

Andrew Bailey, chief executive of the UK's financial watchdog, said in a speech earlier this year that "the absence of active underlying markets" meant the future sustainability of Libor could not be guaranteed.

Manipulation of Libor, used to price trillions of pounds of financial products including loans and mortgages, was uncovered in 2012 when traders and banks were accused of fixing the rate to their own benefit. To date, it has been responsible for about Libor, is welcome on many levels for regulators. Libor was tied to some of the banking industry's biggest scandals, leading to billion of dollars in fines and and conviction of several bankers for manipulating the rate.

On Friday, the FCA said all 20 of the panel banks that provide Libor submissions - upon which the rate is set - would continue to support Libor until the end of 2021 when it is expected the rate will be replaced by a market-based alternative. The European Central Bank has also looking at similar action.